Kelly is a well meaning idiot. He's just another exponent of baseless western training wisdom. All
great squatters have a knee-in action out of the bottom of the squat to initiate the concentric. Including all of the eastern squatters, olympic and powerlifting. Even our Kingfisher initiates the movement out of the bottom with a knee-in burn.
AFTER getting out of the bottom of the squat once you're near the sticking point it's fine and good to now push knees outwards to complete the concentric. This out-knee action prevents getting bent over into a good morning.
So if you look at it, knees in is a dumb slogan, as is knees out. Dogma sucks. What matters is using the correct knee action at the right time during the squat.
I illustrate what I have talked about with a video of a russian squatter using both knees-in and knees-out at the appropriate times. Watch carefully, you'll see on the descent a knee-forward action into the bottom, then knee-in action to initiate the ascent, followed by a knee-out action to complete the ascent.
http://www.youtube.com/watch?v=wwgs7nF7cZAAnd KF doing the same (it gets more pronounced as the set goes on, the first few reps are too subtle to notice but it's there):
http://www.youtube.com/watch?v=SsRFP4s1VYY